Non-compete agreements are a key legal tool for protecting businesses, but their enforceability can often be confusing. In Florida, non-compete agreements—and the non-compete clauses within them—are generally enforceable, but they must meet certain criteria. For both employees and employers, understanding non-compete requirements is essential to avoid potential legal issues. Whether you’re an employee wondering if you can work for a competitor or an employer seeking to protect your business interests, it’s crucial to understand how Florida non-compete agreements work.
In this blog, we will explain what makes a non-compete agreement enforceable, answer the question “Are non-compete agreements enforceable?”, explore what employees should consider before changing jobs, and show how employers can draft legally sound non-compete clauses. We’ll also discuss recent developments and changes to non-compete law, including proposed federal rules that could impact the future of non-compete agreements across the country.
Are Non-Compete Agreements Enforceable in Florida?
To understand non-compete agreements and their enforceability in Florida, you must understand Florida Statute § 542.335. This statute governs the enforceability of restrictive covenants, including non-compete clauses, and outlines the legal requirements that must be met for such agreements to be valid. Specifically, it requires that the agreement be in writing, signed by the person against whom enforcement is sought, and supported by a legitimate business interest. The statute also mandates that the terms, such as duration, geographic scope, and restricted activities, must be reasonable in order to be enforceable.
Several factors determine whether the non-compete agreement will be upheld in court:
- In Writing and Signed: The agreement must be in writing and signed by the employee. Florida Non-compete agreements are not enforceable if they are not properly executed (Florida Senate).
- Legitimate Business Interests: The employer must have a legitimate business interest to protect. This can include:
- Trade secrets
- Confidential information
- Customer relationships or goodwill
- Specialized training
- Trade secrets
- Reasonableness: The restrictions in the agreement must be reasonable. This includes limiting the duration, geographical area, and activities restricted by the agreement. In Florida, the non-compete agreement will not be enforceable if it imposes unreasonable limitations.
- Narrow Scope: The scope of the restrictions in a non-compete clause should not be broader than necessary to protect the employer’s legitimate business interests. For example, an agreement that prohibits an employee from working in the same industry across the entire state for 10 years may be deemed unreasonable.
Can I Work for a Competitor if I Signed a Non-Compete?
One of the most common questions employees have is whether they can work for a competitor after signing a non-compete agreement in Florida. The answer depends on whether the agreement is reasonable and enforceable.
- Reasonable Restrictions: If the agreement is reasonable in scope, duration, and geography, it is likely enforceable. However, if the restrictions are too broad or do not protect a legitimate business interest, the agreement may be void.
- No Written Agreement: For an agreement to be enforceable, it must be in writing and signed by both parties. Oral non-compete agreements are not enforceable.
- Transfer of Agreement: If your employer changes ownership or undergoes a merger, the non-compete may no longer be enforceable unless the agreement allows for its transfer to a successor and you have consented to that transfer.
How Can Employers Draft a Legally Sound Non-Compete Agreement?
For employers, it’s critical to ensure that non-compete agreements are legally sound and enforceable. Here’s a checklist for creating a strong non-compete agreement:
- Stay Informed on Legal Developments: Monitor federal and state-level changes to non-compete law that may impact enforceability. Legal standards are evolving, and staying updated ensures your agreements remain compliant and enforceable.
- In Writing and Signed: Always have a non-compete agreement in writing and signed by the employee to ensure its enforceability.
- Define Legitimate Interests: Clearly specify the business interests being protected. This could include confidential information, client relationships, or proprietary knowledge.
- Limit Duration and Scope: Keep the duration and geographic scope of the restrictions as narrow as possible to avoid unreasonable limitations on the employee’s ability to earn a living.
- Specificity of Activities: Be specific about what activities are restricted. For example, instead of broadly prohibiting the employee from working for any competitor, specify the type of competitors or industries that are restricted.
- Include Assignment Provisions: If you want the non-compete agreement to apply to future employers or business successors, include provisions for assignment.
- Provide Notice: Give the employee sufficient time (at least 14 days) to review the agreement before they begin employment.
- Review Regularly: Regularly update your non-compete agreements to comply with evolving state and federal laws.
What Happens If I Violate a Non-Compete Agreement?
Employees who violate a non-compete agreement can face serious consequences. The employer may seek to enforce the agreement by filing a lawsuit, which could result in an injunction to prevent the employee from working for a competitor or starting a similar business.
Consequences of violating a non-compete agreement in Florida include:
- Injunctions: A court order that prevents the employee from working for the competitor.
- Monetary Damages: Employees may be required to pay damages, which could include financial losses or lost profits caused by the violation.
Defenses: If you are facing enforcement of a non-compete agreement, there are potential defenses available, such as:
- Arguing that the agreement is overly broad or unreasonable in scope.w
- Showing that the employer does not have a legitimate business interest to protect.
- Demonstrating that the agreement was not assigned properly to a successor.
Are Non-Compete Agreements Being Banned Nationwide?
The future of Florida non-compete agreements is uncertain due to recent changes to non-compete law proposed by the Federal Trade Commission (FTC). In April 2024, the FTC issued a final rule banning new non-compete agreements for most workers, including senior executives. However, this rule is currently on hold due to a federal court order, and the FTC has appealed the decision (FTC).
If the rule is upheld, existing non-compete agreements will remain enforceable for senior executives, but all others will become unenforceable. This development may significantly change the way non-compete agreements are used in Florida and across the country.
Key Takeaways
- Are non-compete agreements enforceable in Florida? Yes—if they are reasonable, in writing, signed, and protect legitimate business interests.
- Employees should carefully review their non-compete agreement in Florida before making any moves to join a competitor or start a similar business.
- Employers must ensure their non-compete agreements are well-crafted, clear, and legally sound to avoid unenforceability.
- The future of non-compete agreements is uncertain, especially with the pending FTC regulations. Employers and employees alike should stay informed about ongoing legal developments.
If you’re uncertain about the enforceability of your non-compete agreement or need assistance in drafting a strong non-compete clause, contact an experienced Florida non-compete attorney or non-compete lawyer to navigate these complex legal issues.
Conclusion
Understanding the enforceability of non-compete agreements in Florida is essential for both employees and employers. For employees, it’s crucial to know the terms of your Florida non-compete agreement before making career moves, as violating the agreement can result in significant legal and financial consequences. Employers, on the other hand, must ensure that their non-compete agreements are drafted carefully to protect legitimate business interests without being overly restrictive.
As the legal landscape evolves, with proposed federal regulations and ongoing changes to non-compete law, it’s more important than ever to stay informed about developments that could impact non-compete enforceability. Whether you need help evaluating the terms of your agreement, defending against a violation, or drafting a legally sound contract, non-compete attorneys at Cantrell Schuette are here to help.
Don’t navigate this complex area of law alone—contact us today to ensure your rights and interests are protected in this ever-changing legal environment.
